AML for Real Estate Agents: Property as the Path of Least Resistance
- juliachinjfourth
- 2 days ago
- 10 min read
Two property agents. Two fines. One wake-up call.
In mid 2025, Singapore's Council for Estate Agencies (CEA) penalised two real estate salespersons for failing to conduct customer due diligence on clients connected to the country's largest money laundering case.
One agent was fined S$5,000 for an industrial property purchase. The other, S$2,000 for a commercial transaction. The amounts seem small. But here's what they signal: property agents are now on the frontline of financial crime prevention, whether they're ready or not.
And this isn't just a Singapore story.
The Property Laundering Cycle
Stage | Activity in Real Estate | Goal |
Placement | Using illicit cash to make a down payment or pay for renovations. | Get the "dirty" cash into the financial system. |
Layering | Buying property through a shell company owned by an offshore trust. | Create distance between the criminal and the money. |
Integration | Selling the property and receiving a check from a legitimate law firm. | Make the wealth appear as "clean" capital gains. |
Why Criminals Love Property
Global Financial Integrity and the UN estimate that $1.6 trillion is laundered through property markets worldwide annually.
Why real estate? Because property does what banks increasingly cannot: it "cleans" money.
What Property Offers | Why Criminals Value It |
High value, single transactions | Moves large sums quickly without multiple transfers |
Price subjectivity | "Market value" is negotiable - overpayment hides illicit funds |
Resale liquidity | Property can be sold, converting dirty assets to clean proceeds |
Rental income | Generates legitimate-looking cash flow |
Refinancing options | Bank loans against property create clean money from dirty equity |
Ownership opacity | Trusts, companies, and nominees obscure beneficial owners |
Cross-border movement | International purchases move value across jurisdictions |
The S$3 billion Singapore case provides a universal lesson: Criminals don't need to hack the bank if they can walk through the front door of a property agency.
In that case, more than 200 properties valued at over S$370 million were used as the primary "integration" tool for illicit funds. The properties ranged from luxury condominiums to commercial buildings, purchased by individuals whose stated occupations couldn't possibly support such acquisitions.
The agents who facilitated these transactions? They earned their commissions. They also became unwitting participants in one of Asia's largest money laundering operations.
From Local Oversight to Global Enforcement
While Singapore's enforcement actions caught headlines, they are merely the first tremors of a global tectonic shift. Under FATF's 5th Round of Mutual Evaluations (2024–2030), the "honeymoon period" for gatekeepers is over.
The Core Shift: From Technical Compliance to Effectiveness
Regulators are no longer asking "Do you have an AML policy?" They're demanding proof that it actually works.
The 6-Year Cycle: Evaluations are now 40% more frequent. There is no longer time to "rest" between assessments.
The 3-Year Deadline: Countries must fix "Significant Deficiencies" within 3 years or face the FATF Grey List, with direct consequences for every property transaction involving that jurisdiction.
The Proliferation Financing Mandate: For the first time, DNFBPs must assess and mitigate the risk of sanctions evasion related to weapons of mass destruction.
FATF's July 2024 Horizontal Review of Gatekeepers found that cornerstone obligations - CDD, internal controls, and risk-based supervision consistently lag in the real estate sector.
How Criminals Exploit Real Estate Agents
Property agents are attractive to criminals precisely because they're not banks. They don't have sophisticated transaction monitoring. They don't have compliance departments. They have commission incentives that reward closing deals, not asking questions.
Method 1: The Cash Purchase
A buyer appears with funds for a cash purchase. No mortgage means no bank due diligence. The agent facilitates the transaction. The property is purchased, held briefly, then sold. The proceeds, now from a "legitimate" property sale, enter the banking system cleanly.
What should happen: Cash purchases, particularly from foreign buyers or through corporate structures, warrant enhanced scrutiny. Where did the funds originate? Can the buyer demonstrate legitimate source of wealth?
Method 2: The Overvaluation
A buyer offers significantly above market value. The seller is delighted. The agent earns a larger commission. Everyone wins, except that the "overpayment" is actually a way to move additional illicit funds through the transaction.
What should happen: Significant overpayment is a red flag, not a bonus. Why would a rational buyer pay substantially more than market value? The answer often involves money that needs to be moved.
Method 3: The Proxy Buyer
A young student purchases a $5 million property. A retiree on pension income acquires a portfolio of commercial buildings. The stated buyer cannot possibly afford the purchase — because they're not the real buyer.
What should happen: When the buyer's profile doesn't match the purchase, ask why. Nominee arrangements and proxy buyers are classic money laundering techniques.
Method 4: The Rapid Flip
A property is purchased and sold within months, sometimes at a loss. The transaction makes no commercial sense, unless the purpose isn't profit but movement of funds.
What should happen: Rapid transactions without clear commercial rationale warrant questions. Why buy and sell so quickly? What's the real purpose?
Method 5: The Complex Structure
An offshore trust, owned by a company in another jurisdiction, managed by nominees, purchases residential property. The beneficial owner is invisible behind layers of legal structures.
What should happen: Complexity that obscures ownership is a red flag. Legitimate buyers rarely need three layers of corporate structure to purchase a family home.
Method 6: The Renovation Scheme
A property is purchased, "renovated" with inflated invoices from related contractors, then sold or refinanced at a higher value. The renovation costs were largely fictional, a way to inject additional illicit funds and extract them as legitimate equity.
What should happen: Dramatic value increases through renovation warrant scrutiny. Are the improvements real? Are the contractors legitimate? Does the increased value reflect actual work?
Red Flags: What Should Trigger Scrutiny
Client Red Flags
🚩 Profile mismatch: Buyer's stated occupation or income doesn't support the purchase price
🚩 Reluctance to provide information: Resistance to standard due diligence questions
🚩 Third-party payments: Funds coming from sources other than the named buyer
🚩 Nominee indicators: Buyer seems unfamiliar with the property or transaction details
🚩 Unusual urgency: Pressure to complete quickly without clear reason
🚩 Cash purchases: Particularly from foreign buyers or through corporate structures
🚩 PEP connections: Links to politically exposed persons or their associates
Transaction Red Flags
🚩 Significant overpayment: Offers substantially above market value
🚩 Rapid flipping: Purchase and sale within short timeframes
🚩 No apparent logic: Transaction doesn't make commercial sense
🚩 Price manipulation: Understating or overstating values without justification
🚩 Back-to-back transactions: Quick successive deals involving same parties
🚩 Settlement changes: Last-minute alterations to payment arrangements
Structural Red Flags
🚩 Complexity without logic: Offshore trusts for domestic family homes
🚩 Multiple corporate layers: Structures designed to obscure rather than facilitate
🚩 Nominee arrangements: Directors or shareholders who appear to be proxies
🚩 High-risk jurisdictions: Connections to countries with weak AML controls
🚩 Shell company buyers: Entities with no apparent business operations
The Human Cost
It's tempting to view property transactions as purely commercial - buyer, seller, commission, done.
But behind money laundering through real estate are real victims.
The corruption victims: When a corrupt official launders stolen public funds through London or Sydney property, the victims are citizens of countries denied schools, hospitals, and infrastructure. The money that bought that penthouse was meant for public services.
The fraud victims: Investment scams, romance frauds, business email compromises - the proceeds often flow into property. Every laundered dollar represents someone who lost their savings, their retirement, their trust.
The trafficking victims: Human trafficking and drug trafficking generate billions that need laundering. Property is a favoured vehicle. The luxury apartment complex may have been funded by human misery.
The tax victims: When illicit funds inflate property markets, legitimate buyers are priced out. Young families can't afford homes in their own cities. The economic distortion affects everyone.
The market integrity victims: When property markets become laundering vehicles, prices disconnect from fundamentals. Bubbles form. Markets become unstable. When they correct, innocent homeowners suffer.
The chain of harm: The property agent who doesn't ask questions enables the purchase. The purchase integrates illicit funds. Those funds came from victims. The agent, focused on commission, becomes an unwitting link in a chain of harm that stretches from the victim to the criminal to the property.
That's what AML for real estate is really about. Not paperwork. Not box-ticking. But refusing to be the mechanism through which criminal proceeds become legitimate wealth.
How Real Estate Differs from Other Gatekeepers
Aspect | Real Estate Agents | Banks | Lawyers |
Primary function | Facilitate property transactions | Move and hold money | Provide legal advice and structures |
Criminal need | Integration - converting assets to legitimate wealth | Layering - moving money through accounts | Legitimacy - legal structures and privilege |
Typical exploitation | Cash purchases, overvaluation, proxy buyers | Wire transfers, shell company accounts | Trusts, corporate structures, client accounts |
Monitoring capability | Limited - no transaction monitoring systems | Extensive - sophisticated AML technology | Limited - reliance on professional judgment |
Regulatory maturity | Emerging - newer AML obligations | Mature - decades of regulation | Developing - balancing privilege with obligations |
The critical distinction: Banks see money moving. Lawyers see structures being created. But real estate agents see the integration moment, when illicit value transforms into legitimate property ownership.
This is often the final stage of money laundering. By the time funds reach a property purchase, they may have already passed through banks and legal structures. The property agent is the last gatekeeper before criminal proceeds become "clean" assets.
That's why the regulatory focus on real estate is intensifying. It's not the first line of defence. It's often the last.
The Capacity Gap - And How to Close It
Here's the reality: most property agents don't have compliance departments.
Solo agents manage their own client relationships, their own transactions, and their own compliance.
They don't have transaction monitoring systems. They may not have formal AML training. They have commission structures that reward closing deals.
The capacity gap is real. But it's not an excuse, and regulators aren't waiting.
What Property Agents Can Do Today
1. Know Your Client - Really Well
Don't just collect identification documents. Understand who you're dealing with. Does the buyer's profile match the purchase? Can they plausibly afford this property? If something doesn't add up, ask questions.\
2. Understand Source of Funds
Where is the money coming from? "Cash" isn't an answer - it's a red flag. Legitimate buyers can explain their source of funds. Those who can't, or won't, warrant enhanced scrutiny.
3. Question Complexity
When a transaction involves offshore structures, multiple corporate layers, or nominee arrangements, ask why. Sometimes there are legitimate reasons. Often there aren't. Complexity that obscures is a warning sign.
4. Recognise Urgency as a Red Flag
Legitimate buyers rarely need to close within 48 hours at any price. Unusual urgency often signals that someone wants to complete before questions are asked.
5. Document Your Reasoning
If you assessed a client and concluded they were legitimate, write down why. If a regulator asks later, "I had a good feeling" isn't a defence. Documentation is.
6. Use Available Tools
Most jurisdictions provide free access to sanctions lists and designated persons registers. Check them. "I didn't know they were sanctioned" is not a defence when the information was publicly available.
7. Trust Your Instincts - Then Verify
If something feels wrong, it probably is. But don't stop at instinct. Investigate. Ask questions. Seek verification. Your instincts are telling you something - listen, then act.
8. Know When to Walk Away
Not every commission is worth earning. If a transaction raises serious concerns and the client can't or won't address them, walking away is the professional response. The commission you forgo is smaller than the liability you avoid.
The PULSE Framework for Real Estate
The capacity gap is real. A solo agent doesn't have a compliance department, but the expectations are the same. This is where the PULSE framework becomes your shield:
P - Purpose
Recognise that you aren't just selling property; you are protecting a financial ecosystem. Your signature on a transaction tells the world this purchase is legitimate. That responsibility extends beyond your client to the broader community.
U - Unified Standards
Apply the same rigour to every client, regardless of the commission size. The high-value transaction deserves scrutiny, but so does the unusual mid-range purchase. Criminals look for the path of least resistance. Don't let commission pressure create that path.
L - Leadership
Whether you're a solo agent or run an agency, foster a culture where "walking away" from a suspicious deal is celebrated, not punished. The agent who declines a questionable transaction is protecting the firm, not costing it money.
S - Screening
Use free government tools to check Designated Persons lists. Screen for PEPs. Verify beneficial ownership when corporate structures are involved. Ignorance is no longer a legal defence - the information is available to those who look.
E - Evidence
Document your rationale. If you didn't write down why you cleared a suspicious source of funds, it didn't happen. When regulators review your files, they're looking for evidence of thought, not just completed forms.
The Singapore Wake-Up Call
The two agents fined in Singapore weren't criminals. They were professionals who failed to ask the right questions about clients who turned out to be connected to massive money laundering.
S$5,000. S$2,000.
The fines were small. The message was not.
Those agents are now publicly associated with Singapore's largest money laundering case. Their names appear in enforcement records. Their professional reputations are marked.
And they're the lucky ones. They received fines, not criminal charges. They kept their licences. They can continue practising.
Under the "per breach" penalty structures now being adopted globally, the next wave of enforcement will be different. Fines will be larger. Licence suspensions will be more common. Criminal liability will extend further.
The question isn't whether enforcement is coming. It's whether you'll be ready when it arrives.
The Bottom Line
Real estate has become the world's favourite money laundering vehicle.
$1.6 trillion annually. More than 200 properties in a single Singapore case. Cash purchases, proxy buyers, complex structures - all flowing through property agents who may not realise what they're facilitating.
The fines were small this time. Under the new "per-breach" global reality, the next ones will be career-ending.
But the stakes aren't just professional. They're human.
Every property transaction that launders criminal proceeds has victims at the other end. The corruption that stole public funds. The fraud that took someone's savings. The trafficking that destroyed lives. The property agent who doesn't ask questions becomes part of that chain.
The criminals have networks. They have advisors who help them find agents who ask fewer questions. They have systems designed to exploit the gaps between what agents are required to do and what they actually do.
It takes a network to defeat a network.
The agent who asks hard questions. The agency that empowers staff to walk away. The profession that takes its gatekeeper role seriously.
That's how we close the gatekeeper gap.
Are you part of the defence?
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This is Part 2 of our DNFBP series.
Coming Next: AML for Lawyers - When Legal Privilege meets Financial Crime Prevention.
𝗥𝗲𝗹𝗮𝘁𝗲𝗱 𝗥𝗲𝗮𝗱𝗶𝗻𝗴:
𝗙𝗔𝗧𝗙 𝗥𝗲𝘀𝗼𝘂𝗿𝗰𝗲𝘀:
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If your organisation is grappling with these challenges, get in touch. We'd love to help.
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